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Hologic Downgraded by Evercore, Upgraded by Piper Jaffray

NEW YORK (GenomeWeb) – In competing notes to investors today, analysts at Evercore ISI and Piper Jaffray have issued new opinions on Hologic, with Evercore downgrading the company to Hold from Buy, and Piper Jaffray upgrading it to Overweight from Neutral.

The banks also changed their price targets for Hologic. Evercore lowered its target to $42 while Piper Jaffray raised its to $48.

Though both banks focused on the company's recent divestiture of its blood screening business to Grifols for $1.85 billion, they view the consequences of the sale differently.

In his note, Evercore analyst Vijay Kumar said the divestiture is a long-term positive, but limits near-term EPS growth. "Simplistically, the divestiture is expected to be [about] $.34 or 17 percent dilutive to EPS while yielding a net proceed of [about] $1.1 billion, which on a net basis will be a dilutive transaction," Kumar wrote. "While Hologic historically has been a strong double-digit EPS grower, we are modeling a slight decline in EPS for FY17, before reverting back to double-digit growth in FY18."

Given this view, there is a limited upside for the company's shares until the EPS picture becomes more clear, he noted, though he also added, "The one caveat to this thesis could be a potential corporate tax reform, which we think boosts EPS by at least 5 percent and provides a near-term catalyst for investors."

At Piper Jaffray, analyst William Quirk said he prefers to focus on Hologic's potential in 2018, forecasting that key product launches and further adoption of the company's 3D mammography technology will provide opportunities for growth.

Further, he noted, "Hologic should have plenty of cash from its recent divestiture for accelerated debt pay down and/or acquisitions, which may further reaccelerate the top line."  

Hologic shares were relatively flat at $40.19 in morning trading on the Nasdaq.

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